GST's impact on India's gold market

On 1st July, India’s labyrinth of taxes will be replaced with a simple, nationwide Goods & Services Tax (GST). This is the biggest fiscal reform since India’s liberalisation in the early 1990s. While gold consumers will face a slightly higher tax rate, and the industry will go through a period of adjustment, we see the net impact on the gold industry as being positive. The gold supply chain should become more transparent and efficient, and the tax reform can boost economic growth, which we see as supporting gold demand.

Gold Demand Trends Q1 2017

Global gold demand in Q1 2017 was 1,034.5t. The 18% y-o-y decline suffers from the comparison with Q1 2016, which was the strongest ever first quarter. Inflows into ETFs of 109.1t, although solid, were nonetheless a fraction of last year’s near-record inflows. 

India’s gold market: evolution and innovation

In 2015 India was the world’s fast growing economy; in recent years millions have been lifted out of poverty and India’s middle class has swelled. This is important because our econometric analysis indicates income growth drives gold demand. 

Gold Demand Trends Q2 2016

Continued growth in Q2 2016 (+15%) brought total H1 gold demand to 2,335t – the second highest first half on record.

Gold Demand Trends Q1 2016

Gold demand reached 1,290 tonnes Q1 2016, a 21% increase year-on-year, making it the second largest quarter on record.

Gold Demand Trends Full Year 2015

Gold demand in the fourth quarter increased 4% year-on-year to a 10-quarter high of 1,117.7t. Full year demand was virtually unchanged, down just a fraction (-14t) to 4,212t.